The First-Time Buyer
Don't be scared the first time you take the homeownership plunge. There is a large emotional component that goes along with the change from renting to owning — you take on significantly more responsibilities, which can be intimidating — but you also enjoy all the benefits of making decisions yourself and taking pride in the results.
The process requires research, time, dedication, and application — it's something that cannot be embarked upon lightly. As a first-time homebuyer, you must realize this can be a life-changing event, which now puts you in charge of home maintenance, repairs, and taxes. Paying your mortgage is a more serious financial obligation than paying rent, but paying on time is a huge step in establishing credit for yourself to use in acquiring additional property in the future.
Perhaps you are still convinced that buying your own home is out of the question for you, at least in terms of cost. Many people often worry about down payment, closing costs, interest rates, credit, and their income. Yet, thousands of people who have these same fears have found that by considering some of the following options, they were able to afford a home of their own. You may be surprised to realize how many avenues there are to homeownership, even for those with limited means. Don't give up — there are many options available to you.
Many renters could be homeowners today if they approached the house hunt with the same organization and determination they bring to a job search — or even to shopping for a car. Because real estate is such unfamiliar terrain, however, they see figures and prices and sink back and sigh, “I just can't do it.”
Don't be afraid to start small. Just because you may qualify for a large loan doesn't mean that it is a smart financial decision to buy as large a home as possible. Take a careful look at your family budget and your housing needs before you decide how much you can really afford. — Lucy Duni, director of Consumer Education for TransUnion's
The biggest hurdle that prospective homebuyers have to face today — besides their own fears — is the down payment. Chapter 2 will cover some of the sources for down payments.
Another deterrent to homebuying for many renters has to do with tunnel vision. When you think of a home, do you imagine an attractive single-family house in a good neighborhood in your present community, perhaps on a half-acre lot even though you know those homes are out of your price range? That narrow view of what constitutes the perfect home could be holding you back from homeownership.
What should you look for your first time around? Don't get caught up in finding your dream house — that will come two or three homes down the road. First-time homebuyers usually must make sacrifices — sometimes a lot of them. Don't be discouraged if you can't afford a home like the one your parents live in when you're ready to buy your first home.
Become an educated buyer and do your research. Understand the steps necessary before taking the homebuying plunge. Especially important is evaluating your credit rating — avoid paying credit cards or your rent late. If you need to make improvements, now is the time to do so!
Keep your eyes on one objective: buying a solid home you will be able to sell when you want, probably in the next few years. When you're ready to purchase your next home, you will likely be able to afford something more expensive or larger or in a better neighborhood. And from that home you may even move again, trading up just a little more.
The steps to becoming a homeowner may seem daunting, but taken one step at a time, you'll find they aren't so bad. The effort you put into buying your first home will pay off in countless ways; the financial and emotional benefits of owning a home are very rewarding.
